"Social Security is supposed to be a lifeline for retirees to help seniors have some financial security once their paychecks stop. While benefits are not supposed to be the sole source of income for older Americans, they are supposed to be an important income source that helps retirees afford essential expenses. Unfortunately, benefits are not providing the buying power that retirees need and deserve."
"In fact, Nationwide Retirement Institute's 2025 Social Security Survey revealed that over 50% of people who are currently collecting Social Security benefits have been forced to cut back on their living expenses because prices are going up faster than their benefits. This is not supposed to happen. In fact, Cost of Living Adjustments (COLAs) are specifically built into Social Security to prevent this exact scenario from occurring. Unfortunately, the COLA formula is failing seniors badly in 2026, and retirees are paying the price."
"COLAs provide automatic benefit increases when a consumer price index shows that prices have increased year over year. Specifically, the Social Security Administration looks at the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) and compares how costs have gone up year-over-year. The Social Security Administration focuses on third-quarter CPI-W data, and retirees get a benefits increase equal to the percentage increase in CPI-W from one year to the next."
Social Security aims to provide important income for retirees after paychecks stop but benefits are losing buying power as prices rise. Nationwide Retirement Institute's 2025 survey found over 50% of current beneficiaries cut living expenses because prices rose faster than benefits. Cost of Living Adjustments (COLAs) are designed to prevent benefit erosion by linking automatic annual increases to changes in the CPI-W. The Social Security Administration uses third-quarter CPI-W year-over-year data to calculate COLAs, producing a 2.8% increase for 2026. The 2026 COLA formula failed to keep benefits aligned with rising costs, leaving many retirees financially strained.
Read at 24/7 Wall St.
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